@Allstate.
Allstate announced preliminary results for the fourth quarter of 2022, with an estimated net loss between $285 million and $335 million and an estimated adjusted net loss between $335 million and $385 million.
“Net gains on investments and derivatives for [Q4] 2022 are estimated to be $95 million, primarily due to increased valuation on equity investments.”
However, it’s net investment income in the fourth quarter of 2022 was estimated at $557 million, the company said in its preliminary statement late on Wednesday, including performance-based investment income estimated at $147 million.
“Net gains on investments and derivatives for the fourth quarter of 2022 are estimated to be $95 million,” it said. “Primarily due to increased valuation on equity investments, which is partially offset by losses on sales of fixed income securities.”
Comparatively, net investment income in the third quarter of 2022 was estimated at $690m, including performance-based investment income estimated at $335m. Three individual investments generated approximately 97% of the performance-based investment income in the Q3,” said the insurer’s statement.
Fellow US giant Travelers announced earlier this week that it had a more healthy Q4 despite cat losses than Q3 with good investment income.
“In the fourth quarter we removed approximately half of our duration shortening interest rate derivatives resulting in a modest increase to fixed income duration.”
Premiums written by the company increased 11.4% from the fourth quarter of 2021 to $11.5 billion driven primarily by higher average auto and home insurance premiums.
Like other insurers, cat losses were a bitter pill to swallow for Allstate: cat losses for Q4 were estimated to be $779 million, pre-tax, including losses in December of $593 million, pre-tax.
Allstate’s statement went on to add that “proactive portfolio actions” designed to reduce inflation and economic risk by shortening its fixed income duration and reducing equity exposure had mitigated portfolio losses by approximately $2 billion this year. “In the fourth quarter we removed approximately half of our duration shortening interest rate derivatives resulting in a modest increase to fixed income duration,” the statement said.
The total return on the $61.8 billion portfolio was 2.5% in the fourth quarter of 2022 and 4.0% for the year ending December 31, 2022. “[This] compares favourably to full year 2022 performance of the S&P 500 of - 18.1% - and the Bloomberg Intermediate Bond return of 9.4%.”
The company, one of the US’s largest non-life insurers, had revenue of nearly $44.6 billion in 2021 and had 46,000 employees pre-pandemic.
